It paid to be an early investor
Faceboook? Maybe we should call it Flopbook.
The social-networking company's market debut will long be known as one of the worst initial-public-offering fiascos ever.
Launched at an overly ambitious (some would say "greedy") price of $38 a share, Facebook started off just fine, popping to $45. Then things took a wrong turn.
Sellers drove the price back down. A Nasdaq ($COMP) trading system meltdown made it impossible for eager investors to know if they owned the stock or not, with some double- and triple-buying as a result. The stock ended its first day basically flat.
The next day, the painful slide picked up pace. Facebook (FB.O) now sells for about $27 a share, 28 per cent below the offering price.
If you were one of those "average Joe" retail investors who chased the IPO — fighting to buy close to the offering price that first day — you've taken a bath. But of course, Wall Street being Wall Street, the IPO wasn't about you.
Lots of people higher up on the food chain made big bucks on Facebook's flop. They include some you know, like a certain Mr. Zuckerberg, and some you don't. Insiders, early investors and bankers reaped the biggest gains, says Jacqueline Garner, an IPO expert and an associate professor of finance at Drexel University.
But there is some hope you may be in the winner's circle with them — at least on a small scale — if you happen to own one of the mutual funds that bought in early enough.
Click ahead for a look at the winners in Facebook's IPO flop.
* All funds in USD.
Have your say
Is now a good time to buy a house?
Thanks for being one of the first people to vote. Results will be available soon. Check for results
- Yes, prices will continue to rise.
- No, Canada is facing a housing bubble and prices will eventually fall.
- I don't know.
March 12 (Bloomberg) –- The stolen passports used on Malaysia Airlines Flight 370 that disappeared over the weekend raised serious questions about pass... More March 12 (Bloomberg) –- The stolen passports used on Malaysia Airlines Flight 370 that disappeared over the weekend raised serious questions about passport security. Just how hard is it to doctor a stolen passport? Easier than you might think, but by 2018 it will be nearly impossible. Former White House security advisor and Bloomberg contributor Richard Falkenrath explains why. (Source: Bloomberg)
Date 20 mins ago, Duration 2:03, Views 0